Housing package launched

Local communities secretary Hazel Blears is launching the package

Tuesday, 02, Sep 2008 05:58

Free loans will be offered to first time buyers in a desperate effort to kick-start the housing market, the government has announced

The programme, called HomeBuy Direct, will offer first-time buyers with a household income below £60,000 loans worth up to 30 per cent of a new home, interest-free for five years.

The government expects this will help 10,000 buyers onto the property ladder.

In addition, for the estimated 9,000 families on the brink of repossession, the government is launching a mortgage rescue scheme.

Social landlords such as housing associations would pay off the debt and the homeowner would then rent the house back at an "affordable" level.

Extra cash will also be available for cheap housing schemes, which could see 5,500 new homes being built over the next 18 months.

“"his is a short term survival plan for the prime minister, not a long term recovery plan for the economy," said shadow chancellor George Osborn.

Russell Jervis, managing director of estate agent network haart, said: "The government's housing market rescue package is certainly long overdue and decisive action is now imperative.

"With property prices falling by 15 per cent in many areas already this year, we have seen a renewed interest in first time buyers looking to purchase a property.

"However, this important group of buyers is being stopped in its tracks by a lack of available finance and the crippling stamp duty tax, which has prevented the enquiries translating into sales."